Owner’s Draws and Capital Contributions

An owner’s draw is money that you, as a business owner, take from your business for personal use.

A capital contribution is the opposite — money you put into your business from personal funds. Quicken Business & Personal can help you properly record both so you maintain accurate records, keep personal and business finances separate, and ensure proper tax treatment.

Why It Matters

Handling draws and contributions correctly:

Keeps your books aligned with your real bank activity.
Prevents mistakes like recording draws as expenses (they’re not tax-deductible).
Lets you track how much you’ve invested in your business vs. how much you’ve withdrawn.
Supports accurate Net Worth reporting across personal, business, and combined views.

Common Examples

Owner’s Draws

Transferring money from your business account to your personal account.
Writing yourself a check from the business.
Using business funds to pay personal bills.

Example: Sarah runs a consulting business. She transfers $3,000 from her business checking account to her personal account to cover her mortgage. This $3,000 is an owner’s draw.

Capital Contributions

Depositing personal funds into your business account.
Using personal savings to pay for business expenses.

Example: Sarah invests $10,000 from her personal savings into her business checking account. This is a capital contribution.

⚠️ Important: Draws and contributions affect your equity in the business — not your business income or expenses.

Scenarios: Which Best Fits You?

📋 Scenario 1: Simple Monthly Withdrawal
You transfer the same amount each month (e.g. $4,000 for living expenses).
→ Use Method 1: Direct Transfer

📊 Scenario 2: Detailed Equity Tracking
You take varying amounts or want to track your ongoing investment in the business.
→ Use Method 2: Owner’s Equity / Capital Accounts

💰 Scenario 3: Personal Budget Integration
You want draws to appear as income in your personal Spending Plan and budgeting tools.
→ Use Method 3: Income Categorization

How to Record Owner’s Draws in Quicken

First, perform the real transaction and move the money.

Bank transfer (online or mobile app)
Check to yourself
Debit card used for personal spending

Quicken automatically brings in the withdrawal from your business account and the deposit into your personal account (if both are connected).

Next, apply the right tracking method for your situation:

✅ Method 1: Direct Transfer (Simplest)

Best for: Most small business owners.

Link the withdrawal and deposit as a transfer between your business and personal accounts.
Mark the business side as business and the personal side as personal.
To include the personal side in your Spending Plan, make sure it isn’t excluded.

✅ Method 2: Owner’s Equity / Capital Accounts (Advanced Tracking)

Best for: Users who want a running record of their investment and draws.

Set up two special accounts in Quicken:

Other Asset (Personal use): “My Investment in Business A”
Other Liability (Business use): “Capital Contributions to Business A”

Then:

When you contribute money: record a transfer from Personal Checking → Business Checking, and reflect the same amounts in the Investment and Capital Contribution accounts.
When you take a draw: record a transfer from Business Checking → Personal Checking, and reflect the same amounts in the Investment and Capital Contribution accounts.

This gives you accurate Net Worth reports:

Personal-only reports show your investment as an asset.
Business-only reports show it in Liabilities & Equity.
Combined reports balance both sides.

💡 Tip: Ask your accountant whether this method is right for your business structure.

✅ Method 3: Income Categorization (Budget Focused)

Best for: Users who want draws to appear as income in personal budgeting.

In your personal account, categorize the deposit as “Owner’s Distribution” (set up as an Income category, no tax line).
In your business account, categorize the withdrawal as an external transfer.

This makes draws show as income in your Spending Plan and income reports.

Best Practices

Choose one method and stay consistent for the tax year.
Use clear descriptions like “Owner’s Draw – Jan 5”.
Monitor business cash flow before making draws.
Keep supporting documentation (bank transfer confirmations, check images).
Review draws and contributions regularly against profits to ensure healthy equity.

Common Mistakes to Avoid

Recording draws as business expenses (they aren’t deductible).
Taking draws when business cash flow is tight.
Forgetting to record personal contributions into the business.
Mixing business and personal transactions in one account without tracking equity.

✨ In Summary:

Use Direct Transfers for simple tracking.
Use Capital Accounts if you (or your accountant) need detailed equity records.
Use Income Categorization if you want draws to appear in your personal budget.

Either way, recording both draws and contributions helps you see the full picture of your relationship with your business.